In newly released, partially redacted search warrants in the federal prosecution of a Hayward man for Chinese-backed espionage, there's a new wrinkle being revealed involving the purchases of $20 million worth of hotel properties in and around the Bay Area.

It's unclear if this represents an entirely new case centered on financial wrongdoing, or if the investigative threads are linked. But the Mercury News reports that the FBI's case has led them to examine multiple real estate deals involving 56-year-old Xuehua "Edward" Peng as a "silent partner," and his sister as a "straw buyer." The sister's name is redacted in the documents, but the Mercury News checks property records to find that Mill Valley resident Penny Ching is listed as owner on several of the properties in question. The sister, who may be Ching, now may be accused of misrepresenting the transactions to lenders and tax authorities.

As we heard back in September, Peng is accused of acting as a spy for China following a years-long sting operation. The sting involved undercover agents who fed Peng faked U.S. intelligence that he then was found, on multiple occasions, to allegedly be handing off to Chinese intelligence operatives in Beijing. Peng is a naturalized U.S. citizen who moved to the Bay Area in 2001. He worked as a registered acupuncturist before establishing a company that led tours for Chinese tourists.

The new evidence in the case might suggest a manner in which Peng was being compensated for his alleged spy work, though that thread remains uncertain. As the Mercury News explains, Peng was listed as having partial ownership in one of the corporate entities that bought the California properties.

Per the Merc:

An FBI agent accused Peng’s sister of purchasing, through different business entities, the single-room occupancy Shree Ganeshai Hotel in San Francisco for $1.7 million in January 2013; the Red Lion Hotel in Oakland for $10.35 million in January 2013; the Country 17 Inn Hotel in Dixon, California for $5.28 million in January 2015; and a Napa property with a vineyard and house licensed to serve as a bed and breakfast for $2.28 million in November 2015.

The cash for the purchases came from multiple Chinese entities in quantities under $50,000 in American bank accounts. Authorities surmised that Peng's sister was acting as a "straw buyer" because she withdrew various amounts from these accounts without paying it back.

The Shree Ganeshai Hotel (pictured above) is a four-story, 31-room SRO on Sixth Street in San Francisco that was listed for sale on LoopNet in 2012. The building has two ground-floor retail spaces including Pentacle Coffee — and the 2012 listing suggests that "if looking for a more passive investment, new ownership can acquire the real estate and then simply continue to lease the hotel and two street level commercial retail spaces" rather than assume management of the building themselves.

According to the search warrant documents, Peng's sister was listed as the guarantor for loans to purchase the properties, however she allegedly did not list them on tax returns.

But how Peng was involved or how these property purchases might be connected to his espionage work remains unclear from the documents — and the two threads in this story could be completely unlinked. The feds note that Peng had a conversation they were listening to in April 2019 in which he referenced "those people in China" who were the real owners of the Red Lion Hotel, saying they were trying to "kick us out" — referring to his and his sister's joint partnership in the hotel.

Peng has been held since September in federal custody with no bail. Peng's sister has not yet been charged with any crime.

Previously: Bay Area Man Charged With Acting As Spy For China